Background
For nearly a century, ARCO’s predecessor operated a copper smelter in Montana. The smelter contaminated the area with arsenic and lead. In 1983, the EPA designated an area of over 300 square miles around the smelter a Superfund site. In the decades since, the EPA has worked with ARCO to remediate the site.
In 2008, a group of 98 property owners within the site sued ARCO in Montana state court asserting common-law nuisance, trespass, and strict liability. The landowners sought restoration damages under Montana state law based on a restoration plan more stringent than the EPA’s cleanup plan.
Issue One: State-Court Jurisdiction
The Court first addressed whether CERCLA section 113 precludes the landowners’ claim for restoration damages in state court. (ARCO agreed that CERCLA does not preclude the landowners’ claims for other types of damages brought under state law.) The Court ruled that it does not.
Section 113(b) gives federal district courts exclusive original jurisdiction over all controversies “arising under this chapter.” Because the landowners’ state-law claims do not “arise under” CERCLA, the Montana courts retain jurisdiction over them.
The Court rejected ARCO’s argument that section 113(h) broadens the scope of actions precluded from state-court jurisdiction under section 113(b) to include state-law claims challenging the EPA’s selected remedy. Section 113(h) deprives federal courts of jurisdiction to review challenges to removal or remedial actions except in limited situations, including diversity jurisdiction. Yet, section 113(h) on its face speaks of federal courts, not state courts. Further, section 113(h) allows federal courts sitting in diversity to hear state-law claims challenging the remedy. The Court reasoned that it would make no sense to allow federal courts with diversity jurisdiction to hear such claims, but not state courts. In short, CERCLA “permits federal courts and state courts alike to entertain state law claims, including challenges to cleanups.”
Issue Two: EPA Approval of Restoration Plan
The Court next addressed whether CERLCA section 122(e)(6) requires the landowners to obtain EPA approval of their restoration plan. The Court held that it does because the landowners are potentially responsible parties (PRPs).
Section 122(e)(6) requires PRPs to obtain EPA approval of cleanup plans. Section 107 identifies four classes of PRPs that “shall be liable” for the cost of removal or remedial action, including the “owner” of a “facility.” A “facility” includes “any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located.” The landowners are PRPs because arsenic and lead (which are hazardous substances) have “come to be located” on their property.
The Court rejected the landowners’ arguments that they are not PRPs because CERLCA’s six-year statute of limitations had run and the EPA did not send them notice of settlement negotiations. The Court also held that the landowners are not contiguous property owners under section 107(q).
The Court remanded to case for the landowners to seek EPA approval of their restoration plan.
Takeaway
The Court’s decision leaves the door open to state-court jurisdiction over state-law claims that seek a broader remedy than approved by the EPA. However, this opportunity is limited to non-PRPs. The decision provides additional certainty for PRPs funding cleanup efforts by protecting them from claims of landowners looking for broader cleanups of their property. However, these landowners continue to have claims for diminished value and other compensatory damages under state law. Whether non-PRPs, such as citizen groups, can take advantage of this ruling to seek broader remedies remains to be seen, but the door is open for them to try.
